Published — February 27, 2021
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
Aside from condominium read more about subdivisions: ON ALTERATION OF SUBDIVISION PLAN
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The owner of developer is mandated to develop the subdivision or condominium project according to the approved plan within the time limit
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The buyer may stop payment in case of failure of the developer or owner to develop the subdivision or condominium project
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The installment payments made by the buyer may not be forfeited in favor of the owner or developer
May a buyer of a subdivision lot or condominium unit stop payment?
For a better understanding, let us take the case of Fil-Estate Properties, Ind. And Fil-Estate Network Inc. vs. Spouses Conrado and Maria Victoria Ronquillo, G.R. No. 185798, January 13, 2014.
In this case, Fil Estate Properties, Inc. is the owner and developer of the Central Park Place Tower. Spouses Conrado and Maria Victoria Ronquillo (spouses) purchased a condominium unit at Central Park Place Tower for a pre-selling contract price. On 29 August 1997, the spouses executed and signed a Reservation Application Agreement wherein they paid a deposit as a reservation fee. Also, as agreed upon, the spouses paid the full down payment and had been paying the monthly amortizations until September 1998.
Upon learning that construction works had stopped, the spouses likewise stopped paying their monthly amortization. Claiming to have paid almost half of the purchase price, the spouses, through two (2) successive letters, demanded a full refund of their payment with interest. When their demands went unheeded, the spouses were constrained to file a Complaint for Refund and Damages before the Housing and Land Use Regulatory Board (HLURB). The spouses asked among others for the reimbursement of the total amortization payments.
May the spouses claim for reimbursement of the total amortization payments?
The Supreme Court says:
Yes.
Section 23 of Presidential Decree No. 957 is the rule governing the sale of condominiums which provides:
No installment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within the time limit for complying with the same. Such buyer may, at his option, be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate.
There is a clear non-performance of obligation to develop the condominium project by the owner or developer in this case. Under the law, the injured party who are the spouses in this case may choose between the fulfillment and the rescission or cancellation of the obligation, with payment of damages in either case.
The spouses opted to cancel the contract and asked for the reimbursement of the total amortization payments. In accordance with law, the owner or the developer of the condominium unit was ordered to pay the spouses the total amortization payments plus interest, attorney’s fees and moral damages.
The award of moral damages was founded on the fact that the owner or developer of the condominium unit was found to found guilty of gross negligence amounting to bad faith when they breached their contract, when they failed to address spouses’ grievances and when they adamantly refused to refund the spouses’ payment. Moreover, the spouses were also awarded attorney’s fees as they were forced to litigate for fourteen years and incur expenses to protect their rights.
Finally, as to the first question above, yes, as in this case, the buyer may stop payment on the ground of failure of the owner or developer to develop the subdivision or condominium project according to approved plans and within the time limit.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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Good day Sir, i do really have the same situation with this with regards to a subdivision. Inwas thankful to have read this post. It gave me hope for my money to be refunded. Thou it is a small amount but it is a hard earn money. May God bless me and the developer to refund me as mandated by law. Godbless